Decided on April 17,1982



S.P. Kapur, Judicial Member - (1.) THE appeal is by the assessee, a public limited company. THE assessment year involved is 1974-75 and the previous year ended with calendar year 1973. THE assessment in the case of the assessee has been framed under Section 143(3) read with Section 144B of the Income-tax Act, 1961 ('the Act') and the grievance of the assessee are two-fold, viz. : (i) that the Commissioner (Appeals) erred on facts and in law to hold that only 80 per cent of the initial contribution made by the assessee to the management staff pension fund is allowable as deduction and not the whole of the actual contribution made during the previous year relevant to the assessment year under appeal ; and (ii) that the Commissioner (Appeals) erred on facts and in law in not allowing expenses incurred by the assessee on the issue of bonus shares.
(2.) As regards the first issue, viz., allowance of initial contribution made by the assessee to management staff pension fund, the material facts are that the assessee-company started superannuation fund in January 1970 which was vested in trust created by trust deed and superannuation fund since stands approved by the Commissioner vide order dated 17-12-1971 but made effective from 1-1-1970. During the previous year relevant to the assessment year under appeal, the assessee made initial contribution of Rs. 2,93,009 to the said fund but the ITO disallowed the claim on the ground that the initial contribution is not allowable. The Commissioner (Appeals) held that under Section 36(1)(iv) of the Act read with Rule 88 of the Income-tax Rules, 1962 ('the Rules') the initial contribution towards superannuation fund is allowable subject to limits as may be prescribed and subject to condition as may be specified by the CBDT and, accordingly, he held that in view of Notification No. SO. 3433, dated 21-10-1965 [see Taxmann's Direct Taxes Circulars, Vol. 1, 1980 edn., p. 206] the assessee was entitled to deduction of 80 per cent of the initial contribution made by the assessee towards the said fund subject to condition that the said 80 per cent of the total initial contribution was allowable during five assessment years and in that view of the matter, the total initial contribution being Rs. 2,93,009, 80 per cent of the said contribution worked out to Rs. 2,34,407 and the Commissioner (Appeals) allowed relief to the assessee at Rs. 46,881 being one-fifth of Rs. 2,34,407. He further held that the assessee would be at liberty to claim similar relief in the following four assessment years, namely, the assessment years 1975-76, 1976-77, 1977-78 and 1978-79. The assessee is, as yet, aggrieved, hence, this appeal and we are seized of the matter.
(3.) WE have heard the learned authorised representatives of the parties at length. WE have also perused very carefully the orders of the lower authorities and the paper book since placed on our file, for and on behalf of the assessee, which, inter alia, contains, 'copy of trust deed and rules of superannuation fund', 'copy of approval of superannuation fund by the Commissioner which is dated 17-12-1971', 'details showing initial contribu tion made to the fund on account of each member-employee of the assessee' and 'copy of certificate of the company regarding initial contribution'. The assessee has also placed on our file extracts from the order of the Special Bench of the Tribunal, Bombay, made in the case of Amar Dye-Chem. Ltd. v. ITO [IT Appeal No. 3643 (Bom.) of 1974-75, dated 1-12-1977, since reported in [1983] 3 SOT 384]. For the assessee, strong reliance has been placed on statutory Rules 87 and 88 of the rules and on Section 36(1)(iv) and it has been contended that the total initial contribution made by the assessee during previous year relevant to the assessment year under appeal are allowable and the reliance by the Commissioner (Appeals) on notification issued by the CBDT, viz., Notification No. SO 3433, dated 21-10-1965, was unwarranted since according to the assessee, the certificate issued by the CBDT is Contrary to statutory rules as also the provisions of law, viz., Section 36(1)(zv).;

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